SMART SOCHO: How to talk your way thru the deal of a lifetime

Negotiating a property deal well is half the battle won, but doing so effectively requires a lot of tact, information, precision and oodles of patience. For the select few who can accomplish this, now is the best time to put it to good use, writes Rajesh Kulkarni.

With home sales sluggish at best in most parts of the country, home buyers now have the golden opportunity to state their terms and walk away with the best deal possible. However negotiating any deal to your best advantage is a refined art that works best when you the buyer is well-prepared to see it through.

Ask any veteran property investor (or buyer) and he will concur that one of the first things to do before inking a deal is to be well-informed about the selected project. This in terms of important details like when was it launched, area & configuration on offer, what has been the response from potential buyers thus far, property rates in comparable projects in the vicinity and so on.

If units in the said projects are selling like hot cakes (yes, miracles do happen sometimes), it's a clear signal that the developer may not be ready to haggle on the price, but if that's not the case, well, buyer it's your lucky day.

Assuming you have zeroed in on your dream home, but the price is holding you back. Fear not dear buyer, since in a buyers' market, like the one we are seeing today, the customer is well and truly the king. Sit across the table and express your interest in buying the apartment and then see how fast the quoted price begins to tumble.

By definition, most developers are smart businessmen and usually there is always a big difference in the quoted price and the final sale price. It's in the builder's best interests you see, to protect the marketability and valuations of his project, but if you're a serious buyer with money in the bank, a big discount between 10-30 percent off the tariff price is not an impossible task for a smart negotiator.

If that does not work for you, you could always try to rope in a group of interested buyers in the project and negotiate a bulk discount from the developer. There is strength in numbers and big discounts too, more so in a depressed market.

For those buyers taking the home loan route, taking along the letter from the HFC or bank stating their pre-approval for your home loan (based on your income) can be a huge plus in property negotiations.

Not only will it show the builder that you are a serious buyer, a pre-approved loan from a reputed institution may well be your ticket to getting yourself a nice discount or some added freebies thrown in to sweeten the deal and yes, getting both is also entirely a possibility if the ticket size of the property warrants it.

Alternately, if the market prices for units in that locality have crashed or the project has at best got a lukewarm response from buyers, a much bigger discount is very much a possibility.
  
Phase 2 of an effective property negotiation involves making a concrete offer, even if you're unsure about the response from the developer. Always remember that some leading developers are not keen to commence negotiation until after they have received a serious offer.

It goes without saying that your offer cannot be totally off the mark - either too high, which the builder will be more than happy to accept, or to low, in which case he nay never entertain you again.

One of the most practical solutions to overcome this problem is to gather intel on every comparable project in the same vicinity, get the best price from each developer, make a shortlist of projects based on your needs and budget and then tackle those developers with an offer based on existing market values.

In this stage, it's of paramount importance for you, the buyer, to make sure the developer becomes fully aware of your serious intent to purchase the best property at the best price possible within the shortest period of time. With sales down and inventories piling up, every developer is now on the lookout for serious buyers, price no bar.

Once you have conveyed your offer to him, casually mention your professional details in terms of your job profile, the company / business you work/own, a rough estimate of your annual salary/income, it's a smart way of assuring the developer of your capability to afford the property. This in combination with your stated need to close the deal fast can work wonders in terms of knocking off a few lakhs on the asking price.

There will be times when a developer may refuse to budge from his asking price, don't fall off your chair if this happens. It's an accepted fact that developers hate to haggle over property prices. Calmly put forth your best offer for the property and walk away.

Don't be surprised if you receive a call from him in a few days, agreeing to your terms - you can get lucky at times, that's the nature of the real estate business. However if this does not happen, you always have the option of looking at other options in the locality with developers who may be slightly more amenable to your budget and terms.

As an informed buyer, always be aware that there could be many reasons that could decide the lowest price point the developer is ready to accede to. This may include key drivers like how much he had to pay for the land (land cost is the biggest component of the final price), how well the project is selling and the prevailing market scenario among others. In the odd instance where a developer is quoting higher-than-market rates for his project, it's quite possible that the land the project stands on cost him a bomb.

The secret to the art of negotiating is in being well-informed and staying calm during the entire process. Never let your emotions get the better of you, no matter how badly you may want the said property. Like any good card player will tell you, it pays handsomely to sometimes hide your weaknesses, play with a straight face and never reveal that ace hidden in your sleeves until the time is just right.